Compensation of Loss Making Universal Postal Service

Compensation of Loss Making
Universal Postal Service
Henrikas Varnas
Communications Regulatory Authority
of the Republic of LITHUANIA
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
1
Outline
1. Postal and courier market of Lithuania
2. Compensation of loss making universal
postal service:
2.1. Conditions for the provision of the application;
2.2. Mandatory information;
2.3. Evaluation of the application;
2.4. Compatibility.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
2
Postal and Courier Market in Lithuania
(1)
The dynamics of the number of postal and courier
service providers in Lithuania, 2002-2008
100
80
9
60
40
20
11
74
78
2005
2006
14
15
81
76
11
6
54
62
2003
2004
34
11
0
2002
Courier service providers
Henrikas Varnas
2007 2008
I half
year
Postal service providers
CERP "Good Regulatory Practices" Committee meeting, Athens
Entry to the market in
terms of regulations is in
fact
relatively
easy
(notification for courier
service providers).
In addition to the major
international
courier
service providers (such as
DPD, DHL, TNT, UPS),
there are number of active
local competitors, which
primarily operate in cities
(Bijusta, Neg ,Vilpostus).
8 October, 2008
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Postal and Courier Market of Lithuania
(2)
Market share of USP and other postal and courier
service providers according to volumes, %, 2007
PLC Lietuvos paštas
Other postal and courier service providers
Outgoing postal parcels 7,00%
Incoming postal parcels
93,00%
21,40%
78,60%
Outgoing postal correspondence
items
83,90%
16,10%
Incoming postal correspondence
items
84,00%
16,00%
0,00%
Henrikas Varnas
10,00%
20,00%
30,00%
40,00%
50,00%
CERP "Good Regulatory Practices" Committee meeting, Athens
60,00%
70,00%
80,00%
8 October, 2008
90,00%
100,00%
4
Postal and Courier Market of Lithuania
(3)
Revenues of USP and other postal and courier
service providers
70.000.000
60.000.000
50.000.000
EUR
40.000.000
30.000.000
20.000.000
10.000.000
0
PLC Lietuvos paštas
2002 m.
2003 m.
2004 m.
2005 m.
2006 m.
2007 m.
19.415.217 20.019.130 19.498.551 22.193.176 28.778.657 28.507.618
Other postal and courier service 9.908.852 16.793.807 19.156.654 20.824.459 28.145.465 35.192.491
providers
1 EUR = 3,4528 Lt
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
5
Postal and Courier Market of Lithuania
(4)
Market share of USP in postal and courier market
according to revenues, % 2007
PLC
Lietuvos
paštas
97,9%
PLC
Lietuvos
paštas
7,7%
Other postal
service
providers
2,1%
Postal service
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
Other courier
service
providers
92,3%
Courier service
8 October, 2008
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Compensation of Loss Making
Universal Postal Service
(1)
2005
2006
2007
168,2
180,6
228,1
Revenues from
universal postal
services,
mln. LTL
68,8
78,7
82,1
Profit / loss,
mln. LTL
0,2
-8,3
2,1
Revenues,
mln. LTL
1 EUR = 3,4528 Lt
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Compensation of Loss Making
Universal Postal Service
(2)
The Directive 97/67/EC: “In order to ensure that the universal
service is safeguarded, where a Member State determines that the
universal service obligations, represent an unfair financial burden
for the USP, it may establish a compensation fund…”.
In a fully competitive environment, the Directive 2008/6/EC allows
the “introduction of a public subsidy or a mechanism to share the
net cost of USO between providers of services and/or users if the
USO entail a net cost and represent an unfair financial burden for
the universal service providers”.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Compensation of Loss Making
Universal Postal Service
(3)
Postal Law of the Republic of Lithuania, Article 3.4.3:
The RRT shall draft and submit for approval to the
Government or an institution authorised by it the
regulations on compensation for loss-making universal
postal services.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Compensation of Loss Making
Universal Postal Service
(4)
The Regulations on Compensation of Loss-Making
Universal Services:
• have been approved by the Resolution of the
Government of the Republic of Lithuania of 12 March
2008 (published: www.rrt.lt);
• establish the cases and procedures for compensation
of loss-making universal postal services.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Conditions for the Provision of the
Application
The USP has the right to provide to the RRT the request
before 1 May of the current fiscal year to compensate the
losses for the previous fiscal year if:
• the USP executed accounting of the costs according to
the requirements;
• referring to the results of the previous fiscal year,
identified that the provision of universal postal service
was loss-making;
• according to the forecast the loss is likely to remain in
the future and become an unfair burden.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Mandatory Information
(1)
The USP has to submit the application with the following
information:
• data on the revenues;
• data on the costs incurred;
• documents and calculations, evidencing and allowing
for verification of the loss of provision of universal postal
service;
• other necessary information.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
12
Mandatory Information
(2)
The USP has to accompany the request to
compensate the losses of provision of universal postal
services with the estimation of intangible benefit:
• the benefit of universal presence;
• the benefit of the consumers’ database;
• the benefit of the advertising;
• the benefit of reputation;
• other intangible benefit.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Evaluation of the Application
(1)
The RRT, upon evaluating the validity of the application:
• satisfies or refuses the request;
• provides the proposals on the amendments of:
• the highest tariffs of universal postal services;
• characteristics of the public postal network of the USP;
• requirements for the quality of universal postal services.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Evaluation of the Aplication
(2)
The RRT:
• Investigates the request within 60 days from the date of
provision of all the data and documents.
• Within 30 days provides the conclusion to:
• the Ministry of Transport and Communications;
• the Ministry of Finance;
• the National Consumer Rights Protection Board under the
Ministry of Justice;
• the Competition Council of the Republic of Lithuania.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Evaluation of the Application
(3)
• The Minister of Transport and Communications within
30 days adopts the order to compensate the losses or
to refuse to satisfy the request.
• The losses may be compensated by allocations of the
state budget, allocated to the Ministry of Transport and
Communications.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Compatibility
If compensation of universal postal services is a state aid,
Ministry of Transport and Communications takes the
decision to compensate USP only if:
• the provision of the state aid complies with the common
market according to the provisions of the Treaty on
European Community itself
or
• upon receiving a conclusion of the Commission of the
European Communities.
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Compensation of Loss Making
Universal Postal Services
No application till 1 May, 2008
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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Thank you for your attention
Henrikas Varnas
Communications Regulatory Authority
Algirdo Str. 27, LT-03219, Vilnius, Lithuania
Tel. +370 5 210 56 22
E-mail: hvarnas@rrt.lt
Henrikas Varnas
CERP "Good Regulatory Practices" Committee meeting, Athens
8 October, 2008
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